Fear Of Giving Back Profits

Trading of stocks and bonds has many variables and the uncertainty can lead to fear and anxiety. Fear is the biggest hurdle to overcome in this otherwise lucrative way to earn money.

Knowing about fear and how to overcome it can be beneficial for the newbie.

The most common fear is the fear of the unknown, where uncertainty and lack of knowledge of the forces at play can lead to a feeling of gambling away one’s money.

This fear can be overcome by expanding one’s knowledge about trading by taking a course or reading relevant books.

We are hardwired to be right and are awarded throughout our life pursuing what is right while being punished if we are wrong. From an early age, we learn to avoid the embarrassment of being wrong.

Trading success does not rely on one being right all the time or even on the IQ of the person. The outcome is equality reliant on the emotional makeup of the person.

The trading graph provides us with enticing opportunities which can make us act impulsively or over-optimistically, leading to huge losses at the end.

If you miss a golden chance to mint instant money, the wise thing is to let it go. Ups and downs happen all the time in the chart.

• Loss aversion is second nature to most of us, as people prefer to avoid losses as opposed to acquiring a profit.
• Traders fearing loss hesitate to cut their trades and also to execute it when the time comes. This hesitation makes one miss profitable opportunities.
• The way to handle this is to trade with money that is disposable for you, and risking small amounts, while coming in terms with the fact that uncertainty is a certainty in trading.

Trading works with profit and loss both, and when we intervene in the natural law of probabilities, we end up losing by trying to minimize giving back the profit attained.

Having a clear trading plan makes us refrain from taking rash on-the-spot decisions based out of fear.